Methuss

Bankruptcy: Keeping the costs down.

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A few suggestions I will offer up to those trying to keep their costs down without compromising quality of your bankruptcy process.

1. Get an attorney that is a member of NACBA, the National Association of Consumer Bankruptcy Attorneys. BK mills usually are not members of this association. NACBA members usually are more up to date on current case decisions than non-members and have access to a mentoring network of long-time practicing BK attorneys for additional opinions.

2. Be organized. Most people face a $2400 lawyer bill not because handling a BK case is that much more difficult than it used to be (it is a little) but that the lawyer has to spend a lot of time gathering what is needed to fill out the forms.

a. Write up a income expense list. Show all your net income and what goes out. Use realistic or actual numbers. Do this for all your normal expenses. Put unsecured debt and secured debt you are giving up on a separate page. Make sure you list minimum payments, how much you owe, and how far behind you are.

b. Go to the US courts website and print out form 22A (
). Fill this out and have it ready. This is the "means test" everyone is so scared of. It's really not that hard to do. And this will knock an hour or two off the attorney's time if you have done all or most of the work on it already.

c. Order your last 2 years tax transcripts from the IRS. You will need these to file.

d. Pull all your bureau reports and have them ready.

e. Pool together all your home loan info including your Deed and have that ready.

f. Print out a list of your past six months
gross
income. You'll need this to go with your form 22A.

g. Get your last 30 days bank statement history. Be ready to get an additional 5 months worth if requested. (1 out of every 250 bankruptcy filings are audited requiring you to go back six months on bank accounts and 4 years on taxes). If you have a program like MS-Money or Quicken steps f and g are easy...just print reports.

3. Negotiate with your lawyer. His fees are not set in stone. And if you have done a lot of the work already, there is no reason he can't knock off some of his fee. (disclosure: my lawyer knocked off $1000 from his fees because I did everything in step 2a-g before I showed up for my initial consultation).

4. Make sure your lawyer is there for the full process. That means from the time you retain him he should be fielding creditor calls even if you are still making payments on his fee -- they usually won't file your petition until all fees are paid. It also means he should be willing to take action on your behalf for any violations of the automatic stay or discharge injunction after your case is done. It's reasonable to let the attorney take 50% contingency on any post bk violations...after all, even half a settlement with an creditor that thinks they are above the law would be a nice windfall for you. Your lawyer should also be willing to review a 90 day post bk credit report and go after any post-bk reporting violations.

5. Make sure your lawyer is there for others that are affected by your bankruptcy filing. Sometimes (actually it's pretty common) creditors try to pawn off your discharged debt onto other people that may only be authorized users of your account. The lawyer should be willing to take on those tasks at a 50% contingency fee as well. If your lawyer is a member of NACBA, he/she will have an entire network of attorneys to act on #4 and #5 issues.

6. Once you have retained counsel, get your fees paid as soon as possible. The form 22A you filled out has to be current to the 30-day period preceeding your bankruptcy petition filing. If you are preparing for bankruptcy because you know it's on the horizon, you should stop paying all unsecured debt bills and any secured you wish to turn in. Save that for the lawyer/filing fees. (BK court filing fees are $299 for chapter 7 and $274 for chapter 13)

7. Make sure you get your pre and post credit counseling done as soon as possible. The least expensive places to do that right now are:

cricketdebt.com Pre-filing counseling $36

hummingbird.org Post-filing counseling $19

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I'd like to add something else to this as far as getting things ready for your lawyer.

Make up an inventory list of EVERYTHING you own, right down to the toaster oven in your kitchen. Put in a quantity (2 lamps, 2 nightsands etc.) , the value for when you bought it, put in the date for when you bought it (approximate if you have to but be close, depreciation matters !), and then put in a garage-sale value for it today. For smaller items like kitchen utensils, pots and pans and such, group them together and ball-park a value. Unless you've got a VERY expensive set of cookware, this is all you'll need.

List your clothing on a single line. In most districts it's not necessary to list every article of clothing.

If you're married, particularly if you're in a community property state, you also should list whether the items were purchased before you were married, separately or jointly.

For your car, go get the NADA blue-book value for it and add that, it'll save the lawyer having to look it up. On the same entry, note any major flaws or repairs that it needs.

Since this is an assets list, make sure you list cash on hand, cash in the bank, retirement accounts, 401K's etc.. If you have children that you have opened bank accounts for with your names on them, make sure you list them. Don't forget stocks and investments either.

Obviously, you list your house - list the value and the amount of equity. Ask your lawyer what to use as a basis for value, some use tax assessments, others use a real estate 'sell it now' number.

I made a nice spreadsheet with every asset on it, my lawyer was floored, he'd never had anyone do that before - and he liked it.

The list may be way more detail than the lawyer actually needs, but when it comes to the law and especially bankruptcy, it's best to have MORE than you need than not enough.

Keep receipts for EVERYTHING you buy up to your 341 meeting. If any questions come up, you have PROOF of an expense. Yes, it's more paper, but you can toss it all after your case is over. I've heard Trustee's ask for this kind of proof - -better to have it and produce it than sit there with a dumb look on your face at the 341 meeting ;)

The benefit of the inventory list -- now you have a home inventory you could use if you ever have an insurance claim. :D

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My lawyer said unless an individual item or collection is worth more than $600 it doesn't have to be disclosed in such minute detail. They just use the exemption or averages.

Same thing goes for expenses like food and utilities. If you actually spend $300 a month on food but the average for your are is $550, then the lawyer will put $550 on the forms.

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Well, better to have it all than not enough. What you experienced is not true in all districts and even in the same district some Trustees just go for the throat and get into minute detail. I read the post of one woman who was told she had to list EVERY article of clothing, right down to how many pairs of underwear she had ! Extreme - you bet - but she was forced to do it.

Besides, it's a good exercise since you have to list ALL your assets anyway. Most people who've had a household for a while don't really think about ALL the 'stuff' you accumulate.

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I'm going to step out on a limb here and retract something from the original post. Even though Hummingbird.org is the cheapest post-bk program I know of, I'm going to recommend you spend the extra $6 ($25 total) and go to www.daveramsey.com and use his post-bk program.

His program is far more entertaining to go through and you will learn more. It is still approved by the US trustee and the only caveat is you get your certificate in the mail only on business days (each cert has to be personally prepared, not automated).

NOTE (4/9/08): THIS PROGRAM (DAVE RAMSEY) IS NOW RECERTIFIED FOR THE BANKRUPTCY TRUSTEE. YOU CAN GET YOUR CERTIFICATE THROUGH THIS COURSE NOW.

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I am a NACBA attorney in Atlanta. You have some good ideas to cut costs. The cost goes up when I am presented with a shoebox full of bills. What I do is send the potential client a questionaire with a checklist before they even meet with me. It saves a lot of time.

On credit counseling the cheapest one out there is (.a123cc.com) at $30 and (.a247class.com) at 17.50 for financial management class. Whoever you use make sure they can get the class done in a reasonable time. They are very backed up right now which is delaying me getting the case filed. I can't file a case without the credit counseling certificate. All of them are listed on my website that are approved for Georgia.

Tim Cook Law

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You can keep it simple. Keep in mind in a chapter 7 case, a trustee is only looking for assets that I can't exempt to sell off. He sells them takes a cut and gives the rest to the creditors. You list major items of furniture and appliances, collections, tools, jewelry. Each state has different exemptions on what you can exempt of your assets. You want to list your property at FMV which I tell clients is the value a used furniture dealer would come in and buy the property for, or what a neighbor may pay you for it.

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Hi all, curious as to whether it looks suspicious for one reason or another if you have minimal stuff, and thus the reason being you sold it for food, gas money and the bare basics before you thought of going BK. This is basically what Ive done these last 8 months to survive.

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By the way, sorry i didnt mention it earlier, to wrapped up in my own stuff...

Thank you so much Methuss and Ladynred for sharing this info!! Much appreciated!!

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Ok, according to what Im reading the trustee can request that money from me if within so many days prior to the BK proceedings... so this is one X against my reasons for BK and just pay what I owe on the deficiency of the home... (which in the state of TX the bank has 18 months after the last defaulted payment)... and not so sure on the auto yet.... I'll figure this out yet

Hi all, curious as to whether it looks suspicious for one reason or another if you have minimal stuff, and thus the reason being you sold it for food, gas money and the bare basics before you thought of going BK. This is basically what Ive done these last 8 months to survive.

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Any debts occured after your bankruptcy plan is approved must be handled outside the BK. And since this was an emergency nobody will object.

Normally, when you are on a Chapter 13, your trustee ordered you not so get any more loans or credit cards until your BK is discharged. If your trustee finds out, I dont think he going to object to an emergency medical debt....just so long as you continue to make payments to the plan.

But this other question about finding out if you have other collections against you? Whats that about? If you have more unapproved loans that could cause you problems.

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On Wednesday, April 14, 2010, I went to my 341 meeting. Less than 10 minutes. No lawyer. Just moi. That is the best way to keep costs down. I decided I would not engage a lawyer for several reasons, in my opinion, all of them good:

1. I couldn't afford a lawyer

2. I don't really like lawyers, in general.

3. I believed if I could fill out tax forms, then I could fill out BK forms. I

was correct. In that this is virtually exactly what a law office would have

done, simply transfer the information I supplied to the forms, why pay for

that?

4. Chapt 7. Generally uncomplicated. Why pay a lawyer? Even if complicated, why pay a lawyer?

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Another thing to consider about "keeping costs down" is that, according to many statistics, bankruptcies are granted at a 99% clip. It's almost a given you'll be granted your bankruptcy. Now, if this is true, and you can walk and chew gum at the same time, why hire a lawyer?

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2. Be organized. Most people face a $2400 lawyer bill not because handling a BK case is that much more difficult than it used to be (it is a little) but that the lawyer has to spend a lot of time gathering what is needed to fill out the forms.

-------------------------------------------------------------------

Exactly so. And where does the lawyer get the info? Well, from the debtor. This goes to my point about why pay a lawyer for this kind of information transfer. The debtor gives the lawyer credit card amounts and addresses. The lawyer has a staff member fill in the blanks on the BK form. Most debtors can do this on their own, and/or with family or friends' help. It makes no sense to pony up 2400.00 to a lawyer when this is the basic scenario: fill in the blanks.

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Well the simple answer is that as a debtor you don't know if you are going to have a problem after filing with any particular creditor and with the pace of BKs going through the system right now you can't be caught off guard and having to scramble to find a lawyer if a problem arises.

Also keep in mind a lawyer will charge you MORE if he has to pick up the pieces half-way through the process because he will have to rush to get caught up on the proceedings and put his name to filings that he did not prepare himself.

And lastly, having a lawyer do it takes off much of the stress. If you are pro-se, then you are essentially waiving your automatic stay rights related to being contacted by creditors. With a lawyer representing you, the lawyer feilds those calls. Pro-se, you still get calls and have to negotiate with creditors of secured property and field calls from creditors wanting reaffirmations.

Save yourself the hassle and stress and just let the professional do it. Use the right tool for the job.

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Methuss wrote: Well the simple answer is that as a debtor you don't know if you are going to have a problem after filing with any particular creditor and with the pace of BKs going through the system right now you can't be caught off guard and having to scramble to find a lawyer if a problem arises.

Jaknik: $2400 bucks is a lot of bucks for a person having to declare BK. And I don't know what a "particular problem" might be. If a person does his or her homework, he or she should know if there will be any problems. If any problems arise, it would be, most likely, at the 341 meeting, and creditors rarely show. But I can concede the point, to a point, since the lawyer--necessity would be contingent upon individual circumstances. If the creditors are the usual suspects, i.e., credit card issuers, banks, there should be little to no problems.

Methuss wrote: Also keep in mind a lawyer will charge you MORE if he has to pick up the pieces half-way through the process because he will have to rush to get caught up on the proceedings and put his name to filings that he did not prepare himself.

Jaknik: Conceded. But the debtor should have been able to anticipate the problem areas, and, as I said, if the BK problems have stemmed from credit cards (the major player), banks, medical, the process should go smoothly. Saving $2400.00 would make me sure to dot the i's, cross the t's.

Methuss wrote: And lastly, having a lawyer do it takes off much of the stress.

Jaknik: Yes. But back to $2400 saved....

Methuss wrote: If you are pro-se, then you are essentially waiving your automatic stay rights related to being contacted by creditors.

Jaknik: Really? That's news to me. Once you've filed, those creditors are notified within 14 days that all is on hold. No more collections' efforts.

Methuss wrote:With a lawyer representing you, the lawyer feilds those calls. Pro-se, you still get calls and have to negotiate with creditors of secured property and field calls from creditors wanting reaffirmations.

Jaknik: More news to me. This interaction with creditors would occur at the 341 meeting, the meeting with creditors. Prior to that, my understanding (and experience) is that the creditors are permitted no contact.

Methuss wrote: Save yourself the hassle and stress and just let the professional do it.

Jaknik: Or learn by doing.... Again, if the BK is relatively uncomplicated, a person who is reasonably able to fill out his or her tax returns, should be able to following the bouncing ball of BK forms.

Methuss wrote: Use the right tool for the job.

Jaknik: For some, yes. But for someone who does a little homework, it's a good learning experience and tremendously gratifying to handle it pro se. While $2400 bucks taint much nowadays, for a person in the BK straits, it has meaning. And, too, when I found this particular thread, it seemed unbalanced, totally in the corner of obtaining an attorney. So, for a little of the "fair and balanced", pro se is feasible under a variety of circumstances, and I can say this from personal experience and the experience of a 75 year old friend who just went through the process without representation. Easy? No. The air was a bit blue with a battery of curses, on occasion, but it got done. Considering the 299 to file, the purchase of the forms (she hadn't known they were available at the court's website) for about 50 bucks, the cost of the two online courses required (about 50 bucks), the lawyer's fee would have been difficult to come by. In fact, BK would have been out of the question.

Of course, being represented by an attorney can have its benefits. In fact, my daughter habitually told me, warned me, "to get a lawyer..." She wasn't wrong, but she wasn't right, either. And I did save a couple of thousand. In the final analysis, it's all relative.

Edited by Jaknik

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Methuss wrote: If you are pro-se, then you are essentially waiving your automatic stay rights related to being contacted by creditors.

Jaknik: Really? That's news to me. Once you've filed, those creditors are notified within 14 days that all is on hold. No more collections' efforts.

Methuss wrote:With a lawyer representing you, the lawyer feilds those calls. Pro-se, you still get calls and have to negotiate with creditors of secured property and field calls from creditors wanting reaffirmations.

Jaknik: More news to me. This interaction with creditors would occur at the 341 meeting, the meeting with creditors. Prior to that, my understanding (and experience) is that the creditors are permitted no contact.

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Jaknik: Just wanted to add to the above; in the "explanations" B9A, it states:

Creditors Generally May Not Take Certain Actions:

Prohibitd collection actons are listed in Bankruptcy Code 362. Common examples of prohibited actions include contacting the debtor by telephone, mail. or otherwise to demand repayment; taking actions to collect money or obtain property from the debtor; repossessing theh debtor's property; starting or continuing lawsuits or foreclosures; and garnishing or deducting from the debtor's wages. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay.

Jaknik: For most straightforward Ch 7's, this kind of protection should make the debtor really, really consider pro se.....and save a couple of thousand....

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Tank you Methuss. I appreciate your support that you are providing for the members. I like all things piked would try to come here time and again for more updates. Great Job! Keep it up.

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Methuss wrote: If you are pro-se, then you are essentially waiving your automatic stay rights related to being contacted by creditors.

Jaknik: Really? That's news to me. Once you've filed, those creditors are notified within 14 days that all is on hold. No more collections' efforts.

Methuss wrote:With a lawyer representing you, the lawyer feilds those calls. Pro-se, you still get calls and have to negotiate with creditors of secured property and field calls from creditors wanting reaffirmations.

Jaknik: More news to me. This interaction with creditors would occur at the 341 meeting, the meeting with creditors. Prior to that, my understanding (and experience) is that the creditors are permitted no contact.

----------------------------------

Jaknik: Just wanted to add to the above; in the "explanations" B9A, it states:

Creditors Generally May Not Take Certain Actions:

Prohibitd collection actons are listed in Bankruptcy Code 362. Common examples of prohibited actions include contacting the debtor by telephone, mail. or otherwise to demand repayment; taking actions to collect money or obtain property from the debtor; repossessing theh debtor's property; starting or continuing lawsuits or foreclosures; and garnishing or deducting from the debtor's wages. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay.

Jaknik: For most straightforward Ch 7's, this kind of protection should make the debtor really, really consider pro se.....and save a couple of thousand....

Great info! I'm in the process of preparing to file, and it seems like a straight forward, but time consuming process, especially if you have many possessions. I'm new here and there are plenty of resources everywhere, but I would suggest for people to go get a NOLO book on How to file for Chapter 7 bankruptcy. They have different editions each year, with updates, but I got one from last year for about $4.00 or so total off eBay, and there seems to be no major changes for the newer (more expensive) edition anyway. Just my suggestion on a very good resource that breaks things down step by step and really reduces the complexity of all this.

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